Citing the name of Jonathan Miller, head of News Corp.’s digital media group, Bloomberg reported that News Corp. (NWSA), a diversified global media company, has started exploring the future prospects of MySpace, its social networking site.
The news followed after the site tumbled badly despite of its early success and lagged behind its competitor Facebook Inc. with respect to clients. Earlier, the social networking site lowered its headcount by 47.0%, or approximately 500 staff, in its endeavor to revive or restructure its sagging business.
The Buzz is that MocoSpace might acquire MySpace at a price range of $50.0 million to $200.0 million as the media giant has been looking for strategic alternatives for MySpace either to spin off or for possible sale. News Corp. has acquired the Beverly Hills, California-based MySpace in 2005 for a price of $580.0 million
In a separate story, Reuters reported that the Media giant is also planning to put up its own social-gaming business, as valuations of gaming companies is zooming ahead.
Founded in 1922 and headquartered in New York, News Corporation is a diversified global media company operating under Cable Network Programming (which includes STAR Group Limited), Filmed Entertainment, Television, Direct Broadcast Satellite Television and Publishing.
News Corporation’s significant international presence has helped it to broaden its client base and product portfolio. News Corporation principally operates in the United Kingdom, Continental Europe, Australia, Asia and Latin America apart from the United States. We believe that its strong international exposure will drive growth in the coming quarters.
News Corporation has also taken a leap toward an online subscription-based model for general news content. News International, a subsidiary of News Corporation, has started charging readers for online content for The Times of London and Sunday Times of London with effect from June 2010.
However, the company derives substantial revenue from advertising, which in turn, depends upon the health of the economy. During recession, the demand for advertising dropped. Newspaper companies have been grappling with the slump in print advertising demand, with advertisers migrating to the Internet driven by increasing online readership and lower ad prices online than print.
After evaluating the pros & cons, we prefer to maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, News Corp., which competes with Time Warner Inc. (TWX), holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
TIME WARNER INC (TWX): Free Stock Analysis Report
Zacks Investment Research
